Ivanhoe Australia to fund growth, repay debt through A$231 million raising

Finance

Drilling at Merlin Project (30th November) with Five Drill Rigs

Publishing Date: 10 Aug 2010 11:48am GMT
Author: Mining Journal

Ivanhoe Australia Ltd plans to raise A$231 million (US$211 million) through an institutional placement to fund acquisition of the Osborne gold project and for development of the Merlin molybdenum project.

The company’s largest shareholder, Ivanhoe Mines Ltd, will not take part in the raising, which will see its interest in the company diluted to 65% once completed. However, funds raised from the offering will be used to repay part of the debt (A$53 million) owed to Ivanhoe Mines.

About A$18 million of the funds will be used towards the Osborne acquisition from Barrick Gold, and about A$55 million for the Merlin development, both in Queensland.

The remainder of the funds will be used for ongoing exploration, development studies and associated corporate costs.

Chief executive Peter Reeve said: “The equity raising will facilitate Ivanhoe Australia’s development plan, including first production of molybdenum and rhenium ore from Little Wizard in 2011, and Merlin during 2012.”

Existing shareholders eligible to participate in the offering will be able to acquire new Ivanhoe Australia shares at A$2.88 each through a one-for-four offer. This represents a discount of more than 10% on the August 9 closing price.

Ivanhoe Australia will also issue a A$3.38 option for every two shares taken, with expiry set for September 20, 2011.